Consider the following multiplicative demand function where QD = quantity demanded, P = selling price, and Y = disposable income:
QD = 1.6 P-1.5 Y.2
The exponent of Y (i.e., .2) indicates that (all other things being held constant):
a for a one percent increase in disposable income, quantity demanded would increase by .2 percent
b for a one unit increase in disposable income, quantity demanded would increase by .2 units
c for a one percent increase in disposable income quantity demanded would increase by .2 units
d for a one unit increase in disposable income, quantity demanded would increase by .2 percent
e none of the above